TRUMP TO END COST-SHARING SUBSIDIES TO INSURANCE COMPANIES

Trump to end cost-sharing Obamacare subsidies to insurers

Author:
Nation Now

Published:
9:48 AM EDT October 13, 2017

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WASHINGTON — President Trump proclaimed Friday that his goal is to dismantle his predecessor's health care plan, hours after his administration suddenly announced that it would halt subsidy payments to insurers.

"ObamaCare is a broken mess," Trump tweeted. "Piece by piece we will now begin the process of giving America the great HealthCare it deserves!"

President Trump

ObamaCare is a broken mess. Piece by piece we will now begin the process of giving America the great HealthCare it deserves!

Democrats said Trump's move, coming the same day that he signed an executive order designed to loosen rules for insurance pools, will mean higher health care costs for working and middle class families.

The subsidies in question are the subject of a federal lawsuit, and Trump's decision to end will likely trigger more litigation from state attorneys general, who contend the subsidies to insurers are fully authorized by federal law.

“We are prepared to sue,” said California Attorney General Xavier Becerra. “We’ve taken the Trump administration to court before and won.”

House Republicans sued over the subsidies in 2014, claiming the Obama administration was making them illegally because Congress has never appropriate the money. A federal judge in Washington, D.C., agreed with them, but the Obama administration appealed that ruling.

The Trump administration has continued the payments, but cited the legal ruling in announcing late Thursday it would stop.

Legal guidance "has concluded that there is no appropriation for cost-sharing reduction payments to insurance companies under Obamacare," White House spokeswoman Sarah Sanders said in a statement. "In light of this analysis, the government cannot lawfully make the cost-sharing reduction payments."

The Health and Human Services department made the announcement in a statement late Thursday night. “We will discontinue these payments immediately,” said acting HHS Secretary Eric Hargan and Medicare administrator Seema Verma.

In past weeks, Trump has threatened to cut off the subsidies to force Democrats to negotiate over health care.

The subsidies help lower copays and deductibles for people with modest incomes.

Halting the payments would trigger a spike in premiums for next year, unless Trump reverses course or Congress authorizes the money. The next payments are due around Oct. 20.

Frustrated over setbacks in Congress, Trump is wielding his executive powers to bring the “repeal and replace” debate to a head. He appears to be following through on his vow to punish Democrats and insurers after the failure of GOP health care legislation.

On Twitter, Trump has termed the payments to insurers a “bailout,” but it’s unclear if the president will get Democrats to negotiate by stopping payment.

Experts have warned that cutting off the money would lead to a double-digit spike in premiums, on top of increases insurers already planned for next year. That would deliver another blow to markets around the country already fragile from insurers exiting and costs rising. Insurers, hospitals, doctors’ groups, state officials and the U.S. Chamber of Commerce have urged the administration to keep paying.

Leading GOP lawmakers have also called for continuing the payments to insurers, at least temporarily, so constituents maintain access to health insurance. Senate Health, Education, Labor and Pensions Committee Chairman Lamar Alexander, R-Tenn., is working on such legislation with Democratic Sen. Patty Murray of Washington.

The so-called “cost-sharing” subsidies defray copays and deductibles for people with low-to-modest incomes, and can reduce a deductible of $3,500 to a few hundred dollars. Assistance is available to consumers buying individual policies; people with employer coverage are unaffected by the dispute.

Nearly 3 in 5 HealthCare.gov customers qualify for help, an estimated 6 million people or more. The annual cost to the government is currently about $7 billion.

But the subsidies have been under a legal cloud because of a dispute over whether the Obama health care law properly approved them. Adding to the confusion, other parts of the Affordable Care Act clearly direct the government to reimburse the carriers.

For example, the ACA requires insurers to help low-income consumers with their copays and deductibles.

And the law also specifies that the government shall reimburse insurers for the cost-sharing assistance that they provide.

But there’s disagreement over whether the law properly provided a congressional “appropriation,” similar to an instruction to pay. The Constitution says the government shall not spend money unless Congress appropriates it.

House Republicans trying to thwart the ACA sued the Obama administration in federal court in Washington, arguing that the law lacked specific language appropriating the cost-sharing subsidies.

A district court judge agreed with House Republicans, and the case has been on hold before the U.S. appeals court in Washington. Up to this point the Trump administration continued making the monthly payments, as the Obama administration had done.

While the legal issue seems arcane, the impact on consumers would be real.

The Congressional Budget Office estimated that premiums for a standard “silver” plan will increase by about 20 percent without the subsidies. Insurers can recover the cost-sharing money by raising premiums, since those are also subsidized by the ACA, and there’s no legal question about their appropriation.

Consumers who receive tax credits under the ACA to pay their premiums would be shielded from those premium increases.

But millions of others buy individual health care policies without any financial assistance from the government and could face prohibitive increases. Taxpayers would end up spending more to subsidize premiums.

Earlier Thursday, Trump had directed government agencies to design a legal framework for groups of employers to band together and offer health insurance plans across state lines, a longstanding goal for the president.

Contributing: David Jackson

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